RENT First FloorRent Amount at Year 1 2 suites$1800*12*2 = $43,200 1 suite$3600*12*1 = $43,200 Second Floor 5 Suites$1560*12*5 = $93,600 Potential Gross Income (PGI)$180,000 NOI at YEAR 1 Potential Gross Income (PGI)180,000, 100,000 Vacancy & Collection Loss18,000, 10,000 + Miscellaneous Income0 = Effective Gross Income (EGI)162,000, 90,000 -Operating Expenses (OE)64,800, 36,000 -Capital Expenditure (CAPEX)8,100, 4500 = Net Operating Income (NOI)89,100, 49500 (1) Direct Capitalization: Cap rate= 0.084 Value$1,060,714.28
(2)DCF Approach: YEAR123456 PGI180,000180,000*(1+0.03)185,400 185,400*(1.03 ) -VC1800018540 = EGI162,000166,860 -OE64,80066744 -CAPEX81008343 = NOI89,10091,77394,52697362100283103291 NSP Cash Flows Cap Rate = 0.0875 Commission= 4% of sales price Sales Price (SP)103291.8.75% = 1,180,469 -Selling Expenses (SE)47,218 = Net Sale Proceeds (NSP)1,133,252 Cash flows for PV Discount Rate = 10%(Sorry, there was a typo in the video; watch the screen, I updated the numbers) Value$1,060,292
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